We're Not Very Worried About Marimaca Copper's (TSE:MARI) Cash Burn Rate
We can readily understand why investors are attracted to unprofitable companies. For example, Marimaca Copper...
We can readily understand why investors are attracted to unprofitable companies. For example, Marimaca Copper (TSE:MARI) shareholders have done very well over the last year, with the share price soaring by 126%. But while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse. So notwithstanding the buoyant share price, we think it's well worth asking whether Marimaca Copper's cash burn is too risky. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow.
We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. When Might Marimaca Copper Run Out Of Money? You can calculate a company's cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. As at September 2025, Marimaca Copper had cash of US$79m and no debt. In the last year, its cash burn was US$30m. So it had a cash runway of about 2.6 years from September 2025. Importantly, analysts think that Marimaca Copper will reach cashflow breakeven in 4 years.
That means unless the company reduces its cash burn quickly, it may well look to raise more cash. You can see how its cash balance has changed over time in the image below. TSX:MARI Debt to Equity History December 24th 2025 See our latest analysis for Marimaca Copper How Is Marimaca Copper's Cash Burn Changing Over Time? Because Marimaca Copper isn't currently generating revenue, we consider it an early-stage business. So while we can't look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time. The skyrocketing cash burn up 110% year on year certainly tests our nerves.
It's fair to say that sort of rate of increase cannot be maintained for very long, without putting pressure on the balance sheet. While the past is always worth studying, it is the future that matters most of all. So you might want to take a peek at how much the company is expected to grow in the next few years. Can Marimaca Copper Raise More Cash Easily? Given its cash burn trajectory, Marimaca Copper shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Companies can raise capital through either debt or equity. Commonly, a business will sell new shares in itself to raise cash and drive growth.
By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn. Story Continues Marimaca Copper has a market capitalisation of US$952m and burnt through US$30m last year, which is 3.2% of the company's market value. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money. Is Marimaca Copper's Cash Burn A Worry? It may already be apparent to you that we're relatively comfortable with the way Marimaca Copper is burning through its cash.
In particular, we think its cash burn relative to its market cap stands out as evidence that the company is well on top of its spending. Although we do find its increasing cash burn to be a bit of a negative, once we consider the other metrics mentioned in this article together, the overall picture is one we are comfortable with. One real positive is that analysts are forecasting that the company will reach breakeven. Considering all the factors discussed in this article, we're not overly concerned about the company's cash burn, although we do think shareholders should keep an eye on how it develops.
Separately, we looked at different risks affecting the company and spotted 2 warning signs for Marimaca Copper (of which 1 is potentially serious!) you should know about. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts) Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature.
We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.